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▪ Jeremy Mullin and Brian Bolan Agree to Disagree on whether crude oil is in a bullish run and will print $100 a barrel before it’s over
▪ Kevin Matras answers why some stocks have a Zacks Rank of 1 or 2 but can have a Style Score of F, and why some stocks have a Zacks Rank of 4 or 5 but can have a Style Score of A. He also discusses the Employment Situation Report, GDP, Interest Rates, Consumer Confidence and Earnings
▪ Sheraz Mian and Brian Bolan choose one portfolio to give feedback for improvement
▪ Market conditions from both fundamental and technical views
▪ The full list of top-performing stocks over the past 30 days
▪ New stocks added to the Zacks Ultimate portfolio
▪ And much more
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Stocks were mixed on Wednesday as this busy week crossed the halfway point with another inflation report, testimony from the Fed Chair and a fresh round of earnings reports.
The Dow finished higher by 0.13% (or around 44 points) to 34,933.23, while the S&P was up 0.12% to 4374.30. The NASDAQ slipped to the negative side with a decline of 0.22% (or about 32 points) to 14,644.95.
The Dow and S&P fell into the red momentarily before getting back on the plus side. All of these indices were down yesterday, but remain just below all-time highs that were set as recently as this past Monday.
Fed Chair Jerome Powell said pretty much what investors wanted to hear in the first of his two-day Monetary Policy Report to Congress. In a nutshell, the Committee plans to remain patient and keep these easy monetary policies in place for now. The economy hasn’t reached the benchmarks yet that will require a change, and inflation will eventually moderate.
That last part is especially important to investors, who just suffered through a one-two punch of rising inflation indicators. Today we heard that the PPI jumped 7.3% year over year and was up 1% from the previous month, which was well above expectations. This result comes just a day after the CPI, which soared 5.4% year over year.
Investors once again kept their cool amid signs of rising inflation. They’ve been skeptical of the Fed calling this situation transitory, but appear to be giving them the benefit of the doubt for now.
Meanwhile, another round of big banks reported quarterly results this morning. The positive earnings surprises were immense with Citigroup (NYSE:C) beating by 46.4%, Wells Fargo (NYSE:WFC) topping by 45.3% and Bank of America (NYSE:BAC) exceeding the Zacks Consensus Estimate by 33.8%.
However, the toplines of these reports were not as decisive. WFC beat revenue expectations by 14%, which explains why this company bucked the trend and rose 4% on the same day of its release. But C barely beat forecasts and BAC missed by more than 1%, which sent these names lower by 0.3% and 2.5%, respectively, on Wednesday.
The schedule tomorrow includes reports from Taiwan Semiconductor (TSM), UnitedHealth (NYSE:UNH), Morgan Stanley (NYSE:MS) and USB Bancorp (USB), all before the market opens.
We’ll also be getting the second half of Mr. Powell’s testimony to Congress as he goes in front of the Senate Banking Committee. And, of course, Thursday means it’s time for jobless claims as well.
Today's Portfolio Highlights:
Home Run Investor: This portfolio looks for aggressive growth companies that could soar in the future, which is why Brian usually focuses on tech and some industrial plays. But an arts and crafts company? Yes, the editor sees a lot to like in Joann (JOAN), a sewing/fabrics retailer with 855 stores in 49 states. The company beat the Zacks Consensus Estimate by 155% in the April quarter, while rising earnings estimates made it a Zacks Rank #2 (Buy). Brian also appreciates its dividend yield of 2.6%, the great valuation and its CEO buying more than 47K shares a few months back. The service added JOAN on Wednesday, while also dropping Harrow Health (NASDAQ:HROW), Dream Finders Homes (DFH) and The ONE Group Hospitality (NASDAQ:STKS). Read the full write-up for more on today’s action.
Counterstrike: There’s been a lot of good news for Duck Creek Technologies (DCT) of late. First of all, the company crushed the Zacks Consensus Estimate last week with a positive earnings surprise of 400%! And then yesterday it got a large upgrade from a major firm. Therefore, today’s pullback was a great opportunity for Jeremy to add this stock with a 10% allocation. DCT is a Zacks Rank #1 (Strong Buy) provider of SaaS delivered enterprise software to the property & casualty insurance industry. The portfolio also sold Airbnb (ABNB) for a slight loss today. Read the complete commentary for more on today's action, including a look at DCT’s chart and more info on its upgrade and earnings.
Healthcare Innovators: Back in May, Kevin had to sell Invitae (NYSE:NVTA) for a double-digit loss because it got caught up in that ARK (ARKG) bubble burst. But now the dust has settled and the editor thinks it’s time to get back into this innovative company. He has always been a big fan of NVTA because “they combine the best of genetic sequencing, medical-grade diagnostics, and information database/AI technologies to leverage the future of smart health”. It’s now trading under 10X next year’s sales consensus with revenues expected to grow over 50%. Read more about NVTA’s second chance in the complete commentary. In other news, the portfolio had a top performer today as Dicerna Pharmaceuticals (DRNA) rose 3.6%.
Surprise Trader: For the past 11 straight quarters, Halliburton (NYSE:HAL) has beaten the Zacks Consensus Estimate. Dave thinks this Zacks Rank #2 (Buy) has a good chance of making it 12 in a row when it reports before the bell on Tuesday, July 20. HAL is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. The editor added HAL on Wednesday with a 12.5% allocation. Read the full write-up for more.
Headline Trader: "Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee this afternoon, stating that the current inflation, though "notably" elevated, will moderate in coming months, in line with his transitory stance. Powell's comments caused the US 10 Year Treasury to plunge over 7 basis points back below 1.4%.
"The majority of the committee voiced concerns about soaring consumer prices. Still, Jerome maintained his stoic viewpoint on the transitory state of the pricing pressures along with supply chain bottlenecks that will ostensibly work themselves out.
"Jerome went on to say that the Fed 'would be prepared to adjust the stance of monetary policy as appropriate if we saw signs that the path of inflation or long-term inflation expectations were moving materially and persistently beyond levels consistent with our goals.'
"This means that 5%+ inflation growth (year-over-year) will not change the Fed's stance on rates over the next few months. The concerning inflationary data in months reflect the disinflationary period amid the depths of the pandemic this time last year. The Fed will only move to control pricing pressure if this 5%+ inflation lingers into this fall." -- Dan Laboe
All the Best,
Jim Giaquinto
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